SAUDI ARAMCO has been approaching European sellers for 500 parts per million (ppm) gasoil, which could come from Russian Baltics, traders say.

In the Gulf Saudi Aramco has been an aggressive buyer of 500 ppm gasoil and traders says the company has been sounding out European sellers for product “at the right price.”

“There is not a huge amount of outlets that offer 500 ppm at the moment, so if they (Saudi Aramco) are willing to pay enough it makes sense to get it directly from Baltics,” one trader says.

“The arbitrage is not working yet, but it could open soon,” another trader says.

Russia switched to a 500 ppm sulphur content gasoil specification for the domestic market late last year and the local pipeline system has been moving to carry 500 ppm grade. Local sources say the switch has been fully done for 500 ppm in NWE.

While Black Sea is the main exporter of gasoil in the Med region, which is closer to the Red Sea hub, traders say that “there is not that much 500 ppm available there.” Russian 1,000 ppm gasoil continues to be transported to the Black Sea for export.

The arbitrage from NWE to the Red Sea needs to see economics of scale on larger ships, the traders added, like on an LR1, which can carry a 55,000-75,000 metric tonne cargo. Rates for a LR1 tanker are $1.5 million to $1.6 million on the current market, freight sources say.